Trading can seem contradictory. To those looking in from the outside it might seem to have a strong gambling element, but of course a gambler’s approach is anathema to the professional trader. You learn a little more about trading and then realize that trading is about discipline and that capital preservation is the principal concern, and only then capital growth. “It’s the trades you don’t take that are key to your capital growth”, is a mantra that amateurs are encouraged to bear in mind. Just when you’re getting your head around that you may then hear that being too cautious is equally counter-productive. It can all seem confusing. Well, the truth is that it’s not, because if you’re able to develop a good sense of discipline in your trading then it literally becomes a ‘no brainer’, i.e. you don’t have to think or worry about whether to take a set-up or not. If a trade fulfills a set of rules that you have developed as part of your trading strategy then it’s there to take, equally if it doesn’t then you leave it. There is no shall I, shan’t I... Your trading strategy determines it for you.
It’s natural, for most of us, to approach uncertainty with caution, particularly with regards to money. We are hard wired to be cautious about money and fearful of losing it. For those new to trading it seems to be an area wracked with uncertainty and so not surprisingly it is natural to be very cautious. While caution is an excellent trait in trading, it becomes counter productive when it leads to indecision and not placing trades for fear of losing.
It’s therefore important to work out if a fear of losing is actually affecting your trading. A well kept trade journal will reveal all where, amongst other things, you carefully note the reasons why you took or didn’t take what appeared to be a potential trade setup. If your notes reveal indecision or uncertainty too often then it’s likely you’re sense of caution is getting in the way of your trading. This, of course, does not mean that you declare open season on any trade that looks vaguely like it might be going in the direction you would like, far from it. It’s simply that your carefully planned trading strategy, which will have been thoroughly back tested, dictates to you whether a trade should be taken or not. In effect, the decision is taken out of your hands.
It’s natural, for most of us, to approach uncertainty with caution, particularly with regards to money. We are hard wired to be cautious about money and fearful of losing it. For those new to trading it seems to be an area wracked with uncertainty and so not surprisingly it is natural to be very cautious. While caution is an excellent trait in trading, it becomes counter productive when it leads to indecision and not placing trades for fear of losing.
It’s therefore important to work out if a fear of losing is actually affecting your trading. A well kept trade journal will reveal all where, amongst other things, you carefully note the reasons why you took or didn’t take what appeared to be a potential trade setup. If your notes reveal indecision or uncertainty too often then it’s likely you’re sense of caution is getting in the way of your trading. This, of course, does not mean that you declare open season on any trade that looks vaguely like it might be going in the direction you would like, far from it. It’s simply that your carefully planned trading strategy, which will have been thoroughly back tested, dictates to you whether a trade should be taken or not. In effect, the decision is taken out of your hands.
Editors’ Picks
EUR/USD trims gains, hovers around 1.1900 post-US data
EUR/USD trades slightly on the back foot around the 1.1900 region in a context dominated by the resurgence of some buying interest around the US Dollar on turnaround Tuesday. Looking at the US docket, Retail Sales disappointed expectations in December, while the ADP 4-Week Average came in at 6.5K.
GBP/USD comes under pressure near 1.3680
The better tone in the Greenback hurts the risk-linked complex on Tuesday, prompting GBP/USD to set aside two consecutive days of gains and trade slightly on the defensive below the 1.3700 mark. Investors, in the meantime, keep their attention on key UK data due later in the week.
USD/JPY drops toward 155.00 as focus shifts to US data
USD/JPY meets fresh supply and inches closer toward 155.00 in the Asian session on Tuesday. The Japanese Yen holds the upper hand over the US Dollar after Japanese Prime Minister Sanae Takaichi led the ruling Liberal Democratic Party to a historic landslide win and on intervention talks. Traders brace for key US economic data that could offer more clues on the Federal Reserve's monetary policy.
Editors’ Picks
EUR/USD trims gains, hovers around 1.1900 post-US data
EUR/USD trades slightly on the back foot around the 1.1900 region in a context dominated by the resurgence of some buying interest around the US Dollar on turnaround Tuesday. Looking at the US docket, Retail Sales disappointed expectations in December, while the ADP 4-Week Average came in at 6.5K.
GBP/USD comes under pressure near 1.3680
The better tone in the Greenback hurts the risk-linked complex on Tuesday, prompting GBP/USD to set aside two consecutive days of gains and trade slightly on the defensive below the 1.3700 mark. Investors, in the meantime, keep their attention on key UK data due later in the week.
Gold loses some traction, still above $5,000
Gold faces some selling pressure on Tuesday, surrendering part of its recent two-day advance although managing to keep the trade above the $5,000 mark per troy ounce. The daily pullback in the precious metal comes in response to the modest rebound in the US Dollar, while declining US Treasury yields across the curve seem to limit the downside.
Bitcoin Cash trades lower, risks dead-cat bounce amid bearish signals
Bitcoin Cash trades in the red below $522 at the time of writing on Tuesday, after multiple rejections at key resistance. BCH’s derivatives and on-chain indicators point to growing bearish sentiment and raise the risk of a dead-cat bounce toward lower support levels.
Dollar drops and stocks rally: The week of reckoning for US economic data
Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.
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